Recapitalization And Consolidation Exercise In The Banking Industry

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Project and Seminar Topics with material for Banking and Finance

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This work is dedicated to God Almighty for his care and guide throughout my higher National Diploma and throughout the accomplishment of this great work.

It is also dedicated to the soul of aborted babies and motherless children may God bless you all.


I am eternally indebted to the highest God my father and creator, Jesus Christ my Lord and Savior whose name and precious blood is ever ready to defend and protect me in all my physical and spiritual warfare and Holy Spirit my teacher and counselor.

I am also grateful to those encouragement and inspiration were outstanding and broad to enumerate. First my finance Mr. Onwa Ifeanyichukwu and my precious friend Kaneme Oluchi and Victoria Okoye for their love and kindness.

May I most respectively acknowledge the assistance of my supervisor Mr. ND Uzoka whose criticisms proofreading and comments has greatly helped to improve the quality of this work.

My greatest appreciation goes to my most precious Mr. and Mrs. Ibe Edom who by the special grace of God made me what I am today.

I will never forget my spiritual mentor Mr. and Mrs. God’s Will Akandu for his prayers and support. Daddy God bless you and your family.

I acknowledge in special way my uncle for his financial support and my siblings for their support.


The recapitalization and consolidation exercise in the banking industry by the former Central Bank of Nigeria Governor, professor Charles Chukwuma Soludo has raised much argument among the bank regulators, promoter and depositor as if shoring up of ban capital base is a new phenomenon in Nigeria.

Table of Content

  • Title page i
  • Approval page ii
  • Dedication iii
  • Acknowledgement iv
  • Abstract v
  • Table of content vi-viii

Chapter One

  • 1.0 Introduction
  • 1.1 Background of the study 1-2
  • 1.2 statements of the problems 2-3
  • 1.3 Objectives of the study 4
  • 1.4 Research Question 4-5
  • 1.5 Statement of hypothesis 5
  • 1.6 Significance of the study 5-6
  • 1.7 Scope of the study 6
  • 1.8 Limitation of the study 6-7
  • 1.9 Definition of terms 7-8

Chapter Two

  • 2.0 Literature review 9
  • 2.1 Introduction 9
  • 2.2 Main causes of consolidation in Nigeria banking sector 9-10
  • 2.3 Benefits of consolidation in Nigeria banking sector 11
  • 2.4 Bank recapitalization:The imperatives, implications, Options and strategies for banks 12-17
  • 2.5 How banks recapitalization affects business 17
  • 2.6 Effects of post-consolidation on business in Nigeria 18-19
  • 2.7 Post bank recapitalization and consolidation exercise in Nigeria

Chapter Three

  • 3.0 Research design and methodology
  • 3.1 Introduction 20
  • 3.2 Research design 20-21
  • 3.3 Sources / methods of data collection 22-23
  • 3.4 Population and sample size 23-25
  • 3.5 Sample techniques 25-26
  • 3.6 Validity and reliability of measuring instrument 25-26
  • 3.7 Methods of data analysis 26

Chapter Four

  • 4.0 Presentation and analysis of data
  • 4.1 Introduction 27
  • 4.2 Analysis of data 28-38
  • 4.3. Test of hypothesis 38-43
  • 4.4 Interpretation of result 43-44

Chapter Five

  • 5.0 Summary, conclusion and recommendations
  • 5.1 Summary of findings 45-46
  • 5.3 Conclusions 47-48
  • 5.4 Recommendations 48-49
  • 5.5 Bibliography 50-51
  • 5.6 Appendix 52
  • Questionnaires 53-54

Chapter One

1.0 Introduction

1.1 Background Of The Study

The recapitalization and consolidation exercise in the banking industry by the former Central Bank of Nigeria Governor, Professor Charles Soludo has necessitated the need for different organization to engage in corporate consolidation (mergers and acquisition). The concepts of recapitalization refer to the current trend of compelling all commercial banks to raise the capital base from two billion to twenty-five billion Naira by the Central Bank of Nigeria on or before 31st December 2005. This has sent some of these banks on the move to consider merger and acquisition as a survival strategy.

Where We Were Before Consolidation

89 banks with 3,382 branches predominantly in the Urban centres as at June 2004 characterized by structural and operational weaknesses such as

Low capital base: – Dominance of a few banks insolvency and illiquidity. Over dependence on public sector deposits and foreign exchange trading.

Weak corporate governance: – A system with low depositor confidence. Bank that could not real sector of the compared to Africa 27% for developed countries.

1.2 Statement Of The Problems

Business organizations are recently seeing consolidation (mergers and Acquisition) as an alternative means of recapitalizing. The cements trend of compelling all commercial banks raise their capital base from two billion to twenty-five billion naira by CBN on or before 31st December 2005 has sends some of these banks on their heels to consider merger and Acquisition as a survival strategy.

The expected problems regarding consolidation are:

There exits a high degree of calculated risk taking to top opportunities that come the way of business, but there is risk avoidance in Nigeria Business and where risk is low, development is also low and industrial advancement becomes near static.

Consolidation could be very expensive venture in terms of funds required to prosecute it successfully. Corrupts practice of public and private sector levels are another impediment. This need to be discouraged and incidence of corrupt practices should be severely punished because consolidation deals require confidence and trust to promote consummation.

Nigeria suffers anemically from lack of information which may unfortunately hinder significant leaps in business combination.

1.3 Objectives Of The Study

The fundamental objectives of this study are:-

  1. To assess the implication of consolidation on the banking industry.
  2. To examine the impact of consolidation on the Nigeria banks
  3. To highlight possible challenges posed by the policy of the bank consolidation.
  4. Assess Nigeria banks before consolidation.
  5. Identify the benefits of bank consolidation.
  6. Evaluate the prospect of banks after consolidation
  7. Assess the implication of consolidation on bank in Nigeria.

1.4 Research Question

The questions on this research work are:-

  1. Is there significant relationship between capitalization and liquidity ration of bank in Nigeria?
  2. Is there significant relationship between capitalizations and to deposit ration?

1.5 Statement Of Hypothesis

Banidam (2001) defined hypothesis as a tentative answer to the problem.

The following hypothesis will be formulated from the objective and will be verified in the course of this research work and noted as null from guide us in problem that is induced in this research work.

Hypothesis:– There is no significant relationship between capitalization and liquidity ration of banks in Nigeria?
Ho:- There is no significant relationship between capitalization and loan to deposit ration?

1.6 Significant Of The Study

Significant of the study is to add to the general body of knowledge, enlighten the general public on the effects of the bank consolidation on the performance of banks in Nigeria. And also explain the challenges of bank consolidation.
This research work would also establish that fact that consolidation (merger and acquisition) is a veritable means for fostering banking growth.

1.7 Scopes Of The Study

The scope of the study is to know the challenge of bank consolidation. Due to the financial constraint coupled with available, the research will make uses of available materials in the Securities and Exchange Commission’s library. Central bank of Nigeria (CBN) and Association of issuing House of books relevant to the research topic will be consulted and the internet.

1.8 Limitation Of The Study

This research work intends review how recapitalization exercise in Nigeria has brought about immense change in the banking industry by using two banks namely:Fin Bank and Fidelity Bank Plc Owerri Imo State respectively within the period of 2002 to 2011. This research work will concern itself on how the effort of the Federal Government of Nigeria through the help of Central Bank of Nigeria has set up some corrective measure to put in place the activities of the commercial banks.

1.9 Definition Of Terms

a. Bank Re-Capitalization:-

This is the act of supplying long-term funds of the Owners of the bank to meet the requirement of monetary authority. Osiegbu (2005).

b. Consolidation:-

This is the reduction in the number of banks and other deposit taking institution with a simultaneous increase in the size and concentration of the consolidation entities in the sector (BIS, 2001:2)

c. Merger:-

It is the combination of two or more separate firms into a single firm.

d. Acquisition:-

It is where a company takes over the controlling of another company.

f. Modus Operandi:-

A particular method of working or dealing with a task.

g. Cost-Cutting:-

Reduction in the money spent on something because of financial difficulty.

i. Lay-off:-

To dismiss a worker from a job especially temporarily when there is no work to do.

j. Shareholder:-

An owner of shares in a business company.

k. Reform:-

The act of making something more better by correcting or making improvements.

l. Banking sector:-

An organization of various banks that provides financial services and are been supervised by the (CBN).

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How to nail it on the head during your project defence

You are through with writing that project. Now what?

You have found yourself at that point where you have to defend what you have written. Of course you have to stand in front of your supervisor and other literary personalities to prove that you know what you wrote in your project paper. Unfortunately, the more you think about it, the more it looks like you are about to face a legion. It is not a war. But the emotion of dread welling up inside of you makes it look like one. So now you are asking yourself questions.

  • How am I going to start?
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You really want to nail it, but you need to come to terms with exactly how to get everything in perfect control. Especially your emotions of fear that seem to make a wreck of you every time you think about public speaking.
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Watch Your Body Language And Keep It Confident:

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Dress In Your Most Comfortable And Impressive:

Am sure this one is a no brainer. However I must highlight that you choose comfortable pieces. You don’t want to look so good and yet look like you were forced to wear something that does not belong to you. It’s great to ensure that as impressive as your clothes are on you, that they are also very comfortable.

Speak With Authority:

Going hand to hand with that aura of confidence is your most powerful asset:your words. If you look that confident, your words must not come out like whimpers. To be able to pull this off, you definitely need to speak as deliberately as possible in expressing yourself. Let them also hear what they see.

Use, Your Gestures:

I have often found this to come to my rescue in dealing with shyness and conveying my confidence. Usually it gives you an edge to also drive home your point. You must, however, ensure that you do not over use it. It doesn’t mean that your hands should be flying all over the place. That would be absolutely unnecessary. If you do this well, after a while you will realize that you are not as self-conscious as you used to be at the very start. For most situations, it would have completely disappeared altogether; leaving a really confident you talking.

Have A Good Opening And Closing Line:

Make sure you have perfected a good opening line. You should also be armed with a good closing line too. Try and rehearse it to a friend. If for the first time you presented it, your friend does not say “wow, that’s beautiful” or something like that; just know you need to keep refining it until you get the perfect line. Both opening and closing lines will go a long way in how impressed your panel gets to rate you high.

Make Sure You Know Your Work:

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Prepare For The Questions:

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These tips are by no means exhaustive, but applying these tips will give you some necessary advantage you need for a great outcome. Of course that outcome would mean that you eventually earn all your points on this project.



Samuel Obiora Blessed is the CEO and founder of a.k.a Nigeria Students Media, the youngest engineering graduate of Federal Polytechnic Nekede in 2017 and the engine brain behind this great platform. He is the man behind the scene, filled with many potentials. A musician as well as a developer with the interest of Nigeria students at heart. If you need a professional website, contact him via WhatsApp or phone call @ 08143831497 to get the best.

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